Part 1 — Risk-Focused Compliance Compliance Risk-Assessment Matrix by avl14509

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									                                                                Contents


                                   Part 1 — Risk-Focused Compliance

                                  Compliance Risk-Assessment Matrix

Compliance Risk-Assessment Matrix........................................................................................... Matrix-3
   Deposit Account Restrictions .................................................................................................... Matrix-3
       Reserve Requirements of Depository Institutions — Regulation D ................................... Matrix-3
       Prohibition Against the Payment of Interest on Demand Deposits — Regulation Q ......... Matrix-3
   Deposit Insurance Signs and Advertisements ........................................................................... Matrix-3
   Electronic Fund Transfers — Regulation E .............................................................................. Matrix-4
   Truth in Savings ........................................................................................................................ Matrix-5
   Availability of Funds and Collection of Checks — Regulation CC.......................................... Matrix-6
       Subpart B — Availability of Funds and Disclosure of Funds Availability Policies........... Matrix-6
       Subpart C — Collection of Checks..................................................................................... Matrix-6
       Subpart D — Substitute Checks ......................................................................................... Matrix-7
   Equal Credit Opportunity Act — Regulation B ........................................................................ Matrix-7
   Truth in Lending — Regulation Z............................................................................................. Matrix-8
       Subpart B — Open-End Credit ........................................................................................... Matrix-8
       Subpart C — Closed-End Credit......................................................................................... Matrix-9
       Subpart D — Miscellaneous ............................................................................................. Matrix-10
       Subpart E — Special Rules for Certain Home Mortgage Transactions............................ Matrix-10
   Credit Practices Rule — Regulation AA................................................................................. Matrix-11
   Fair Credit Reporting Act........................................................................................................ Matrix-11
   Insider Lending — Regulation O ............................................................................................ Matrix-14
   Home Mortgage Disclosure Act — Regulation C................................................................... Matrix-15
   Real Estate Settlement Procedures Act — HUD’s Regulation X............................................ Matrix-15
   Homeownership Counseling/SCRA Notice ............................................................................ Matrix-16
   Flood Disaster Protection Act ................................................................................................. Matrix-16
       Loans in Areas Having Special Flood Hazards ................................................................ Matrix-17
   Regulation U — Loans Purchase or Carry Margin Stock ....................................................... Matrix-17
   Homeowners Protection Act.................................................................................................... Matrix-17
   Bank Secrecy Act .................................................................................................................... Matrix-18
   Office of Foreign Asset Control .............................................................................................. Matrix-20
   Privacy of Consumer Financial Information ........................................................................... Matrix-20
   Information Security Requirements ........................................................................................ Matrix-21
   Electronic Signatures and Disclosures .................................................................................... Matrix-21
   Right to Financial Privacy Act ................................................................................................ Matrix-22
   Servicemembers Civil Relief Act............................................................................................ Matrix-22




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                                                           Part 2 — Deposits

                                                                     Chapter 1
                                                                     Advertising

Deposit Advertisement............................................................................................................................             1-1
   Tiered-Rate Accounts.........................................................................................................................              1-2
   Stepped-Rate Accounts ......................................................................................................................               1-2
   Representative Examples....................................................................................................................                1-2
Deposit Advertisement Checklist 1.1.....................................................................................................                      1-8


                                                                     Chapter 1A
                                                                      Postings

Postings .................................................................................................................................................   1A-1
   Special Consideration for Web Sites ...............................................................................................                       1A-1
       Equal Housing Lender Poster ...................................................................................................                       1A-1
       Home Mortgage Disclosure Act Notice....................................................................................                               1A-2
       NCUA-Insured Deposit Signs...................................................................................................                         1A-2
       Funds Availability Notices .......................................................................................................                    1A-2
       ATM Fee Notices......................................................................................................................                 1A-3
       Customer Identification Program Notice ..................................................................................                             1A-4
Postings Checklist 1A.1 .......................................................................................................................              1A-5


                                                                  Chapter 2
                                                               Account Opening

Initial Deposit Account Disclosure ........................................................................................................ 2-1
    Truth-in-Savings — Regulation DD .................................................................................................. 2-1
         Annual Percentage Yield and Interest Rate ................................................................................. 2-1
         Fixed-Rate Accounts.................................................................................................................... 2-1
         Tiered-Rate Accounts .................................................................................................................. 2-2
         Balance Information..................................................................................................................... 2-2
         Transaction Limitations ............................................................................................................... 2-3
    Funds Availability — Regulation CC ................................................................................................ 2-3
         Minimum Availability ................................................................................................................. 2-4
         Exception Holds........................................................................................................................... 2-5
         Case-by-Case Holds..................................................................................................................... 2-6
    Substitute Checks (Check 21) — Regulation CC............................................................................... 2-6
    Electronic Fund Transfers — Regulation E ....................................................................................... 2-7
Initial Deposit Account Disclosure Checklist 2.1 ................................................................................. 2-9
Initial Sweep Account Disclosure ........................................................................................................ 2-13
Sweep Account Opening Disclosure Checklist 2.1a ........................................................................... 2-14
Denial of Deposit Account .................................................................................................................... 2-15
    Coverage........................................................................................................................................... 2-15
Denial of Deposit Account Checklist 2.2 ............................................................................................. 2-17


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                                                                                                                                          Contents


                                                            Chapter 3
                                                        Deposit Operations

Deposit Account Restrictions ................................................................................................................. 3-1
   NOW Account Eligibility................................................................................................................... 3-1
   Savings/Money Market Deposit Account (MMDA) Account Transaction Limitations .................... 3-2
   Time Deposit Restrictions .................................................................................................................. 3-3
Deposit Account Restrictions Checklist 3.1 .......................................................................................... 3-5
Deposit Account Transactions ............................................................................................................... 3-7
   Electronic Fund Transfers (EFT)........................................................................................................ 3-7
       Disclosures When Adding EFT Services to an Account ............................................................. 3-7
       Issuance of Access Devices ......................................................................................................... 3-7
       Consumer Liability for Unauthorized Use................................................................................... 3-8
       Change in Terms .......................................................................................................................... 3-9
       EFT Terminal Receipts .............................................................................................................. 3-10
       Disclosures at Automated Teller Machines ............................................................................... 3-10
       Preauthorized Transfers ............................................................................................................. 3-11
   Funds Availability ............................................................................................................................ 3-12
       Exception Holds......................................................................................................................... 3-12
           General Exception Hold Notice........................................................................................... 3-13
           One-Time Exception Notice for Large Deposits or Redeposited Items .............................. 3-13
           Notice of Repeated Overdrafts Exception ........................................................................... 3-13
           Emergency Conditions Exception Notice ........................................................................... 3-14
       Case-by-Case Holds................................................................................................................... 3-14
           Change in Terms ................................................................................................................. 3-15
   Truth-in-Savings............................................................................................................................... 3-16
Deposit Account Transactions Checklist 3.2 ...................................................................................... 3-17
Deposit Account Periodic Statement ................................................................................................... 3-22
   Truth-in-Savings Act (Regulation DD) ............................................................................................ 3-22
   Electronic Fund Transfer Act (Regulation E)................................................................................... 3-24
       Transaction Information............................................................................................................. 3-25
       Exceptions to the Periodic Statement Requirements for Certain Accounts ............................... 3-26
       Documentation for Foreign-Initiated Transfers ......................................................................... 3-26
Deposit Account Periodic Statement Checklist 3.3 ............................................................................ 3-28
Deposit Account Notice of Maturity for Certificates of Deposit....................................................... 3-31
Deposit Account Notice of Maturity for Certificates of Deposit Checklist 3.4 ............................... 3-32
Error Resolution: Electronic Fund Transfers.................................................................................... 3-35
   Applicability of EFT Rules Versus Truth-in-Lending Rules ........................................................... 3-35
       Inquiries Subject to EFT Error Resolution ................................................................................ 3-35
       Ten-Day Period.......................................................................................................................... 3-36
       Forty-Five-Day Period ............................................................................................................... 3-36
Error Resolution: Electronic Fund Transfers Checklist 3.5............................................................. 3-40
Error Resolution: Expedited Recrediting for Substitute Checks ..................................................... 3-42
   Timing of Claim ............................................................................................................................... 3-43
       Extension of Time Period .......................................................................................................... 3-43
       Oral Requests and Written Requirement ................................................................................... 3-43
   Content of Claim .............................................................................................................................. 3-43
   Requiring Written Claim .................................................................................................................. 3-44
       Incomplete Claims ..................................................................................................................... 3-44
   Investigations Completed Within 10 Business Days........................................................................ 3-44


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Risk-Based Compliance Audit Program for Credit Unions


       For a Valid Consumer Claim .....................................................................................................                 3-44
       For an Invalid Consumer Claim.................................................................................................                   3-45
   Investigations That Cannot Be Completed Within 10 Business Days .............................................                                        3-45
       For a Valid Consumer Claim .....................................................................................................                 3-45
       For an Invalid Consumer Claim.................................................................................................                   3-45
   Availability of Recredit ....................................................................................................................        3-45
   Notices Relating to Consumer Expedited Recredit Claims..............................................................                                 3-46
       Notice of Recredit ......................................................................................................................        3-46
   Notice That the Consumer’s Claim Is Not Valid .............................................................................                          3-47
       Notice of a Reversal of Recredit ................................................................................................                3-47
       Model Notice Forms ..................................................................................................................            3-47
Error Resolution: Expedited Recrediting for Substitute Checks Checklist 3.6 .............................                                               3-49
Overdraft Protection Plans ..................................................................................................................           3-51
   Agency Concerns About Program Misrepresentations ....................................................................                                3-52
   Best Practices ...................................................................................................................................   3-52
       Marketing and Communications with Consumers.....................................................................                                 3-53
       Program Features and Operation ...............................................................................................                   3-54
Deposit Accounts: Overdraft Protection Plans Checklist 3.7 ...........................................................                                  3-56
Annual Sweep Account Disclosure ......................................................................................................                  3-57
Annual Sweep Account Disclosure Checklist 3.8 ...............................................................................                           3-58
Appendix 3.A: Regulation CC Model Notices Related to Check 21.................................................                                          3-59




                                                            Part 3 — Loans

                                                    Chapter 4
                                      Loan Advertising and Early Disclosures

Closed-End Loan Advertisements ......................................................................................................... 4-1
   Actually Available Terms................................................................................................................... 4-1
   Advertisement of Terms That Require Additional Disclosures ......................................................... 4-2
   12 CFR 338.3(A) FDIC; Board Order, March 20, 1989 Federal Reserve Board; 12 CFR 528.5 ...... 4-3
Closed-End Loan Advertisements Checklist 4.1 .................................................................................. 4-4
Open-End Loan Advertisements ........................................................................................................... 4-5
   Sections Applicable to All Open-End Plans....................................................................................... 4-5
   Sections Applicable to Home Equity Plans........................................................................................ 4-6
Open-End Loan Advertisements Checklist 4.2 .................................................................................... 4-8
Loan Solicitations Based on Prescreened Lists .................................................................................. 4-10
       Firm Offer of Credit or Insurance .............................................................................................. 4-10
       General Disclosure Requirements.............................................................................................. 4-10
       Recordkeeping ........................................................................................................................... 4-11
       Prescreen Opt-Out Notice .......................................................................................................... 4-11
           Short Notice......................................................................................................................... 4-11
           Long Notice......................................................................................................................... 4-12
Loan Solicitations Based on Prescreened Lists Checklist 4.2a ......................................................... 4-14
Early Adjustable Rate Mortgage Disclosure ...................................................................................... 4-18
   Required ARM Disclosures.............................................................................................................. 4-19
       Teaser and Premium Interest Rates............................................................................................ 4-24


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Early Adjustable Rate Mortgage Disclosure Checklist 4.3 ...............................................................                                   4-25
Credit and Charge Card Early Disclosure .........................................................................................                         4-27
   Definitions ........................................................................................................................................   4-27
       Exceptions..................................................................................................................................       4-27
   Disclosure Methods..........................................................................................................................           4-28
       Initial Disclosures ......................................................................................................................         4-28
       Percentage-Based Fees...............................................................................................................               4-28
       Credit Card versus Charge Card Disclosures.............................................................................                            4-28
       Prominent Location....................................................................................................................             4-28
            In General ............................................................................................................................       4-28
            Electronic Disclosures .........................................................................................................              4-29
       Clear and Conspicuous ..............................................................................................................               4-29
            In General ............................................................................................................................       4-29
            Electronic Disclosures .........................................................................................................              4-29
   Direct Mail and Electronic Applications/Solicitations.....................................................................                             4-30
       Table Format Disclosures and Disclosure Contents ..................................................................                                4-30
       Other Disclosures Required in or Outside of the Table .............................................................                                4-31
   Telephone Applications/Solicitations...............................................................................................                    4-32
       Alternative 1 — Oral Disclosure ...............................................................................................                    4-32
       Alternative 2 — Written Follow-Up Disclosure........................................................................                               4-32
   General Public Applications/Solicitations........................................................................................                      4-32
       Alternative 1 — Full Disclosure ................................................................................................                   4-33
       Alternative 2 — Partial Disclosure ............................................................................................                    4-33
       Alternative 3 — No Disclosure of Information .........................................................................                             4-34
       Prompt Response Under All Alternatives..................................................................................                           4-34
       Alternative 4 — Disclosures Under Special Circumstances......................................................                                      4-34
Credit and Charge Card Early Disclosure Checklist 4.4 ..................................................................                                  4-35
Early Home Equity Plan Disclosure....................................................................................................                     4-42
   Disclosure Statements and Requirements ........................................................................................                        4-42
   Limitations on Home Equity Plans...................................................................................................                    4-45
   Refund of Fees..................................................................................................................................       4-46
       Imposition of Nonrefundable Fees.............................................................................................                      4-46
Early Home Equity Plan Disclosure Checklist 4.5.............................................................................                              4-47
Mortgage Servicing Disclosure ............................................................................................................                4-50
   Mortgage Servicing Disclosure Statement Prior to January 16, 2009..............................................                                        4-50
   Mortgage Servicing Disclosure Statement — January 16, 2009, and Later.....................................                                             4-52
Mortgage Servicing Disclosure Checklist 4.6 .....................................................................................                         4-53


                                                      Chapter 5
                                           Loan Applications and Origination

Equal Credit Opportunity Act (ECOA) Standards .............................................................................                                5-1
Equal Credit Opportunity Act (ECOA) Standards Checklist 5.1 ......................................................                                         5-4
Open-End Applications Not Resulting in Origination.........................................................................                                5-6
   Real Estate Loan Applications ...........................................................................................................               5-6
       Providing Copies of Appraisals ...................................................................................................                  5-6
   Disclosures at Application..................................................................................................................            5-6
   Affiliated Business Arrangements......................................................................................................                  5-7
       Refund of Home Equity Plan Fees...............................................................................................                      5-8



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Risk-Based Compliance Audit Program for Credit Unions


       HMDA/LAR ................................................................................................................................ 5-8
       Disclosure of Credit Score in Real Estate Secured Loans ........................................................... 5-8
            Specific Information Related to the Consumer’s Credit Score ............................................. 5-8
            General Disclosure Regarding Credit Scores and Related Information ................................ 5-9
   All Loan Applications ...................................................................................................................... 5-10
       Written Application ................................................................................................................... 5-10
       Disclosures at Application ......................................................................................................... 5-10
       Monitoring Information ............................................................................................................. 5-11
            For Applications Taken on or After January 1, 2004 .......................................................... 5-11
            When Monitoring Information Is Not Provided by Applicant ............................................ 5-11
            Marital Status ...................................................................................................................... 5-12
            Collection of Monitoring Information on Other Loans ....................................................... 5-12
       Fraud Alerts and Active Duty Alerts ......................................................................................... 5-12
       Use of Medical Information....................................................................................................... 5-12
       Notification of Decision............................................................................................................. 5-12
            Incomplete Applications...................................................................................................... 5-13
            Counteroffers....................................................................................................................... 5-13
       Adverse Action Notice............................................................................................................... 5-14
Open-End Applications Not Resulting in Origination Checklist 5.2................................................ 5-16
Applications Resulting in Origination of Open-End Loans .............................................................. 5-21
   Real Estate Loans ............................................................................................................................. 5-21
       Providing Copies of Appraisals ................................................................................................. 5-21
       Disclosures at Application ......................................................................................................... 5-21
       Affiliated Business Arrangements ............................................................................................. 5-22
       Disclosure of Credit Score in Real Estate Secured Loans ......................................................... 5-23
       Initial Escrow Statement ............................................................................................................ 5-23
       Right of Rescission .................................................................................................................... 5-23
       Disbursement ............................................................................................................................. 5-24
       Waiver........................................................................................................................................ 5-25
       Rescission Period Procedures .................................................................................................... 5-25
       Flood Insurance.......................................................................................................................... 5-26
            Financial Institution Notice Requirement ........................................................................... 5-26
            Prohibited Loans.................................................................................................................. 5-26
            Amount and Timing of Flood Insurance ............................................................................. 5-27
            Escrow Account Requirements ........................................................................................... 5-27
       HMDA/LAR .............................................................................................................................. 5-27
       Written Application ................................................................................................................... 5-27
   All Open-End Loans......................................................................................................................... 5-28
       Disclosures at Application ......................................................................................................... 5-28
       Monitoring Information ............................................................................................................. 5-28
            For Applications Taken Through December 31, 2003 ........................................................ 5-28
            For Applications Taken on or After January 1, 2004 .......................................................... 5-29
            When Monitoring Information Is Not Provided by Applicant ............................................ 5-29
            Marital Status ...................................................................................................................... 5-30
            Collection of Monitoring Information on Other Loans ....................................................... 5-30
       Fraud Alerts and Active Duty Alerts ......................................................................................... 5-30
       Use of Medical Information....................................................................................................... 5-30
       Notification of Decision............................................................................................................. 5-30
            Counteroffers....................................................................................................................... 5-31
       Truth-in-Lending Disclosure ..................................................................................................... 5-31
       Insurance Sales Rules ................................................................................................................ 5-31


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            Exception for Transactions by Mail ....................................................................................                   5-32
            Exception for Transactions by Telephone...........................................................................                        5-32
            Transactions Involving Both Telephone and Mail ..............................................................                             5-32
            Electronic Disclosures .........................................................................................................          5-32
       Credit Practices Rule..................................................................................................................        5-33
       Regulation U — Loans To Purchase or Carry Margin Stock ....................................................                                    5-34
            Section I — Commercial Banks Only .................................................................................                       5-35
            Section II — Nonbank Lenders Only..................................................................................                       5-35
Applications Resulting in Origination of Open-End Loans Checklist 5.3 ......................................                                          5-37
Closed-End Applications Not Resulting in Origination ....................................................................                             5-44
   Real Estate Loan Applications .........................................................................................................            5-44
       Providing Copies of Appraisals .................................................................................................               5-44
       Disclosures at Application .........................................................................................................           5-44
       Affiliated Business Arrangements .............................................................................................                 5-46
       Good Faith Estimate ..................................................................................................................         5-46
       Special Information Booklet on Settlement Costs .....................................................................                          5-48
       Early Truth-in-Lending Disclosure............................................................................................                  5-48
            The Following Section Applies to Applications Received Prior to
            July 30, 2009 .......................................................................................................................     5-48
            The Following Section Applies to Applications Received on or After
            July 30, 2009 .......................................................................................................................     5-49
       Written Application ...................................................................................................................        5-50
       Disclosure of Credit Score in Real Estate Secured Loans .........................................................                              5-50
   All Loan Applications ......................................................................................................................       5-50
       Monitoring Information .............................................................................................................           5-50
            When Monitoring Information Is Not Provided by Applicant ............................................                                     5-51
            Marital Status ......................................................................................................................     5-51
            Collection of Monitoring Information on Other Loans .......................................................                               5-51
       Fraud Alerts and Active Duty Alerts .........................................................................................                  5-51
       Use of Medical Information.......................................................................................................              5-51
       Notification of Decision.............................................................................................................          5-52
            Incomplete Applications......................................................................................................             5-52
            Counteroffers.......................................................................................................................      5-53
       Adverse Action ..........................................................................................................................      5-53
       Adverse Action Notice...............................................................................................................           5-53
            HMDA/LAR........................................................................................................................          5-54
Closed-End Applications Not Resulting in Origination Checklist 5.4 .............................................                                      5-56
Applications Resulting in Origination of Closed-End Real Estate Loans........................................                                         5-64
   Providing Copies of Appraisals........................................................................................................             5-64
   Disclosures at Application................................................................................................................         5-64
   Affiliated Business Arrangements....................................................................................................               5-66
   Good Faith Estimate .........................................................................................................................      5-66
   Special Information Booklet on Settlement Costs............................................................................                        5-68
   Early Truth-in-Lending Disclosure ..................................................................................................               5-68
       The Following Section Applies to Applications Received Prior to July 30, 2009.....................                                             5-68
       The Following Section Applies to Applications Received on or After
       July 30, 2009..............................................................................................................................    5-69
   Disclosure of Credit Score in Real Estate Secured Loans................................................................                            5-70
   HOEPA Disclosures .........................................................................................................................        5-70
       APR Test....................................................................................................................................   5-71
       “Points and Fees” Test ...............................................................................................................         5-72


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Risk-Based Compliance Audit Program for Credit Unions


    Homeowners Protection Act............................................................................................................. 5-77
    HUD-1/HUD-1A Settlement Statement ........................................................................................... 5-79
         Use of “Average Cost” for Certain Charges .............................................................................. 5-80
         General Issues Regarding Completing the HUD-1 and HUD-1A ............................................. 5-80
    Initial Escrow Statement................................................................................................................... 5-82
    Mortgage Servicing Transfers .......................................................................................................... 5-83
    Right of Rescission........................................................................................................................... 5-84
    Flood Insurance ................................................................................................................................ 5-87
    Interest Rate Cap .............................................................................................................................. 5-88
Applications Resulting in Origination of Closed-End Real Estate Loans Checklist 5.5a............. 5-88a
Applications Resulting in Origination of Closed-End Loans............................................................ 5-93
    Written Application .......................................................................................................................... 5-93
    Monitoring Information.................................................................................................................... 5-93
         For Applications Taken Through December 31, 2003 .............................................................. 5-93
         For Applications Taken on or After January 1, 2004 ................................................................ 5-94
         When Monitoring Information Is Not Provided by Applicant................................................... 5-94
         Marital Status ............................................................................................................................. 5-95
         Collection of Monitoring Information on Other Loans.............................................................. 5-95
    Fraud Alerts and Active Duty Alerts................................................................................................ 5-95
         Use of Medical Information....................................................................................................... 5-95
    Notification of Decision ................................................................................................................... 5-95
         Counteroffers ............................................................................................................................. 5-96
    Truth-in-Lending Disclosure ............................................................................................................ 5-96
    Insurance Sales Rules ..................................................................................................................... 5-101
         Exception for Transactions by Mail......................................................................................... 5-102
         Exception for Transactions by Telephone ............................................................................... 5-102
         Transactions Involving Both Telephone and Mail................................................................... 5-102
         Electronic Disclosures ............................................................................................................. 5-102
    Credit Practices Rule ...................................................................................................................... 5-103
    Regulation U — Loans to Purchase or Carry Margin Stock .......................................................... 5-104
         Section I — Commercial Banks Only ..................................................................................... 5-104
         Section II — Nonbank Lenders Only ...................................................................................... 5-105
    HMDA/LAR................................................................................................................................... 5-105
Applications Resulting in Origination of Closed-End Loans Checklist 5.5b................................. 5-106
Initial Open-End Credit Disclosure................................................................................................... 5-113
    All Consumer Open-End Plans ...................................................................................................... 5-113
    Home Equity Plans......................................................................................................................... 5-114
Initial Open-End Credit Disclosure Checklist 5.6............................................................................ 5-115
Exhibit 5.1: Amount Financed/HOEPA Worksheet Sample Completed Form ............................ 5-117
    Appendices on CD.......................................................................................................................... 5-121
    Appendix 5.A: Amount Financed/Prepaid Finance Charge
    (Excel Spreadsheet for 2008) ......................................................................................................... 5-121
    Appendix 5.B: Amount Financed/Prepaid Finance Charge
    (Excel Spreadsheet for 2009) ......................................................................................................... 5-121
    Appendix 5.C: Instructions for Completing HUD-1 and HUD-1A
    Settlement Statements .................................................................................................................... 5-121
    Appendix 5.D: HUD’s Response to Questions from the Massachusetts
    Bankers Association ....................................................................................................................... 5-121
    Appendix 5.E: RESPA Escrow Program from the FDIC (Excel Spreadsheet) .............................. 5-121
    Appendix 5.F: Instructions for the FDIC RESPA Escrow Program .............................................. 5-121



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                                                                                                                                            Contents


                                                              Chapter 6
                                                           Loan Operations

HMDA/LAR ............................................................................................................................................ 6-1
   Special Rule for Requests for Preapproval Received Prior to January 1, 2004.................................. 6-2
   Types of Loans Subject to Reporting ................................................................................................. 6-3
       Home Purchase Loan ................................................................................................................... 6-3
       Home Improvement Loans .......................................................................................................... 6-3
           Special Rule for Applications Received Prior to January 1, 2004 ........................................ 6-4
       Refinancing Loans ....................................................................................................................... 6-4
           Special Rule for Applications Received Prior to January 1, 2004 ........................................ 6-5
   Individual Checklist Items.................................................................................................................. 6-5
       Application or Loan Number ....................................................................................................... 6-5
       Date Application Received .......................................................................................................... 6-5
       Type of Loan or Application........................................................................................................ 6-5
       Property Type .............................................................................................................................. 6-5
           Special Rule for Applications Received Prior to January 1, 2004 ........................................ 6-6
       Purpose of Loan or Application ................................................................................................... 6-6
       Owner Occupancy........................................................................................................................ 6-6
       Loan Amount ............................................................................................................................... 6-6
       Request for Preapproval............................................................................................................... 6-7
       Action Taken................................................................................................................................ 6-7
           Type of Action....................................................................................................................... 6-7
           Date of Action ....................................................................................................................... 6-8
       Property Location ........................................................................................................................ 6-8
           General Rules ........................................................................................................................ 6-8
           Metropolitan Statistical Area (MSA) .................................................................................. 6-10
           State and County ................................................................................................................. 6-10
           Census Tract ........................................................................................................................ 6-10
           Census Tract Number.......................................................................................................... 6-10
       Applicant Information................................................................................................................ 6-10
           Ethnicity of Borrower or Applicant..................................................................................... 6-11
           Race of Borrower or Applicant ........................................................................................... 6-11
           Sex of Borrower or Applicant ............................................................................................. 6-12
           Income ................................................................................................................................. 6-12
           Type of Purchaser................................................................................................................ 6-13
       Reasons for Denial..................................................................................................................... 6-13
       Pricing-Related Data.................................................................................................................. 6-14
           Rate Spread ......................................................................................................................... 6-14
           Date the Interest Rate Was Set ............................................................................................ 6-15
           HOEPA Status..................................................................................................................... 6-16
       Lien Status ................................................................................................................................. 6-16
HMDA/LAR Checklist 6.1 ................................................................................................................... 6-17
Loan Account Transactions ................................................................................................................. 6-19
   Truth-in-Lending: Open-End Accounts ........................................................................................... 6-19
       All Accounts .............................................................................................................................. 6-19
           Change in Terms ................................................................................................................. 6-19
           Prompt Crediting of Payments ............................................................................................ 6-20
           Treatment of Credit Balances.............................................................................................. 6-20
       Credit Card Accounts................................................................................................................. 6-20


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Risk-Based Compliance Audit Program for Credit Unions


            Credit Card Renewals.......................................................................................................... 6-20
            Credit Card Accountability Responsibility and Disclosure Act of 2009............................. 6-21
            Change in Credit Card Insurance Provider.......................................................................... 6-23
            Issuance of Credit Cards...................................................................................................... 6-24
            Liability of Cardholder for Unauthorized Use .................................................................... 6-24
            Right of Cardholder to Assert Claims or Defenses Against Card Issuer............................. 6-25
            Offsets by Card Issuer Prohibited........................................................................................ 6-26
            Prompt Notification of Returns and Crediting of Refunds.................................................. 6-27
            Discounts — Tie-In Arrangements ..................................................................................... 6-27
   Credit Practices Rule ........................................................................................................................ 6-27
   Electronic Fund Transfers ................................................................................................................ 6-27
Open-End Loan Account Transactions Checklist 6.2........................................................................ 6-28
Open-End Loan Account Transactions Checklist 6.2a...................................................................... 6-30
Open-End Loan Account Transactions Checklist 6.2b ..................................................................... 6-31
Open-End Loan Account Transactions Checklist 6.2c.................................................................... 6-32a
Open-End Loan Account Transactions Checklist 6.2d ................................................................... 6-32b
Open-End Loan Account Transactions Checklist 6.2e.................................................................... 6-32c
Open-End Loan Account Transactions Checklist 6.2f .................................................................... 6-32d
Open-End Loan Account Transactions Checklist 6.2g.................................................................... 6-32e
Periodic Billing Statement for All Open-End Consumer Loan Accounts...................................... 6-32g
   Lender Responsibilities .................................................................................................................. 6-32g
       Contents of the Periodic Statement............................................................................................ 6-33
            Previous Balance ................................................................................................................. 6-33
            Identification of Each Credit Transaction ........................................................................... 6-33
            Periodic Rates...................................................................................................................... 6-34
            Split Rates Applied to Balance Ranges ............................................................................... 6-35
            Monthly Rate on Average Daily Balance............................................................................ 6-35
            Multi-Featured Plans ........................................................................................................... 6-35
            Daily Rate on Daily Balance ............................................................................................... 6-35
            Finance Charges Other Than Periodic Rates....................................................................... 6-37
            Accrued Finance Charges Allocated from Payments .......................................................... 6-37
            Address for Notice of Billing Errors ................................................................................... 6-41
Periodic Billing Statement for All Open-End Consumer Loan Accounts Checklist 6.3................. 6-42
Variable Rate Subsequent Disclosure ................................................................................................. 6-44
   Truth-in-Lending: Variable Rate Subsequent Disclosures and Interest
   Rate Adjustments ............................................................................................................................. 6-44
Variable Rate Subsequent Disclosure Checklist 6.4 .......................................................................... 6-45
Error Resolution: Mortgage Servicing ............................................................................................... 6-46
   Mortgage Loans Subject to the Error Resolution Requirements ...................................................... 6-46
Error Resolution: Mortgage Servicing Checklist 6.5......................................................................... 6-48
Error Resolution: Open-End Credit ................................................................................................... 6-50
   Applicability of EFT Rules versus Truth-in-Lending Rules ............................................................ 6-50
       Inquiries Subject to the Error Resolution Procedures ................................................................ 6-50
       Special Rule for Credit Card Purchases..................................................................................... 6-51
       Notification Requirements ......................................................................................................... 6-51
       Unauthorized Credit Card Use................................................................................................... 6-53
       Applicability of Requirements................................................................................................... 6-53
       Disputes ..................................................................................................................................... 6-54
Error Resolution: Open-End Credit Checklist 6.6 ............................................................................ 6-55
Error Resolution: Fair Credit Reporting Act .................................................................................... 6-57
Error Resolution: Fair Credit Reporting Act Checklist 6.7 ............................................................. 6-58


                                                                         xxiv
                                                                                                                                           Contents


Account Servicing: Fair Credit Reporting Act ..................................................................................                     6-59
   Section I — General Use of Consumer Reports...............................................................................                       6-59
       Users Must Provide Certifications .............................................................................................              6-59
       General Prohibition on Reporting Inaccurate Information ........................................................                             6-59
       Duty To Correct and Update Information..................................................................................                     6-59
       Duty To Report Voluntary Closing of Credit Accounts ............................................................                             6-59
       Duty To Report Dates of Delinquencies ....................................................................................                   6-59
   Section II — Obligations of Users of “Prescreened” Lists ..............................................................                          6-60
   Section III — Other Fact Act-Related Requirements.......................................................................                         6-60
       Requirement To Disclose Negative Information Provided to a Consumer
       Reporting Agency ......................................................................................................................      6-60
       Providing Identity Theft-Related Records to Victims ...............................................................                          6-63
           Content of Victim’s Request ...............................................................................................              6-64
           Responding to the Customer’s Request...............................................................................                      6-64
       Prohibition of Sale or Transfer of Debt Caused by Identity Theft.............................................                                6-65
Account Servicing: Fair Credit Reporting Act Checklist 6.8 ...........................................................                              6-66
Account Servicing: Mortgage Servicing Transfers and Flood Insurance Renewals ......................                                                 6-68
   Section I — Transfer of Mortgage Servicing: Flood Insurance .......................................................                              6-68
   Section II — Mortgage Servicing Transfers: RESPA ......................................................................                          6-68
   Flood Insurance Policy Renewals ....................................................................................................             6-70
Account Servicing: Mortgage Servicing Transfers and Flood Insurance
Renewals Checklist 6.9a .......................................................................................................................     6-71
Account Servicing: Flood Insurance Renewals Checklist 6.9b.........................................................                                 6-73
Account Servicing: PMI Cancellation/Disclosures ............................................................................                        6-74
   Selecting a Sample ...........................................................................................................................   6-74
   HOPA PMI Cancellation Requirements...........................................................................................                    6-75
       Loans Made on or After July 29, 1999 ......................................................................................                  6-75
           Borrower Requested Cancellation of PMI ..........................................................................                        6-75
           Automatic Termination of PMI ...........................................................................................                 6-76
           Final Termination of PMI....................................................................................................             6-77
           Calculation of Loan-to-Value Ratios...................................................................................                   6-77
           Annual Disclosure Requirements ........................................................................................                  6-78
           Disclosure Requirement for Lender-Paid PMI....................................................................                           6-78
       Loans Entered into Prior to July 29, 1999 .................................................................................                  6-78
   Fannie Mae’s PMI Termination and Cancellation Requirements ....................................................                                  6-78
       Loans Closed on or After July 29, 1999 ....................................................................................                  6-79
           Cancellation Based on Original Value ................................................................................                    6-79
           Cancellation Based on Current Value .................................................................................                    6-79
           Automatic Termination of PMI ...........................................................................................                 6-80
Account Servicing: PMI Cancellation/Disclosures Checklist 6.10 ...................................................                                  6-82
Account Servicing: Reporting Credit History....................................................................................                     6-84
   Fair Credit Reporting Act.................................................................................................................       6-84
       Reporting of Credit History .......................................................................................................          6-84
           General Prohibition on Reporting Inaccurate Information —
           Section 623(a)(1)(A) and Section 623(a)(1)(C) ..................................................................                         6-84
           Correcting and Updating Information — Section 623(a)(2) ...............................................                                  6-84
           Reporting Voluntary Account Closings — Section 623(a)(4) ............................................                                    6-84
           Reporting Delinquencies — Section 623(a)(5) ...................................................................                          6-84
Account Servicing: Reporting Credit History Checklist 6.11...........................................................                               6-86
Homeownership Counseling and SCRA Notice .................................................................................                          6-87
       Borrowers Entitled to the Homeownership Counseling and SCRA Notices .............................                                            6-87


                                                                         xxv
Risk-Based Compliance Audit Program for Credit Unions


       Providing the Notice .................................................................................................................. 6-87
           Homeownership Counseling Notice.................................................................................... 6-87
   Servicemembers Civil Relief Act Notice ......................................................................................... 6-88
       Model Form — SCRA Delinquent Notice................................................................................. 6-88
           United States Department of Housing and Urban Development
           Servicemembers Civil Relief Act Notice ............................................................................ 6-88
Homeownership Counseling and SCRA Notice Checklist 6.12 ........................................................ 6-90
Account Servicing: Annual Escrow Account Statements.................................................................. 6-91
   Annual Escrow Account Analysis.................................................................................................... 6-91
       Timing........................................................................................................................................ 6-93
       Contents ..................................................................................................................................... 6-94
Account Servicing: Annual Escrow Account Statements Checklist 6.13......................................... 6-97
   Exhibits on CD ................................................................................................................................. 6-99
       Exhibit 6.1: A Guide to HMDA Reporting................................................................................ 6-99
       Exhibit 6.2: CRA HMDA Reporter ........................................................................................... 6-99
       Exhibit 6.3: Mortgage and Foreclosure Rights of Servicemembers under the Servicemembers
       Civil Relief Act (SCRA)............................................................................................................ 6-99
       Exhibit 6.4: Escrow Account History Disclosure Form ............................................................ 6-99
       Exhibit 6.5: Escrow Projections for Coming Year .................................................................... 6-99
       Exhibit 6.6: Escrow Account History Example ......................................................................... 6-99
       Exhibit 6.7: Escrow Account Projection.................................................................................... 6-99
       Exhibit 6.8: Escrow Projections for Coming Year Example ..................................................... 6-99


                                                      Chapter 6A
                                             Servicemembers Civil Relief Act

Servicemembers Civil Relief Act ........................................................................................................          6A-1
   “Servicemembers” Entitled to SCRA Protection ............................................................................                      6A-1
       Those in Active Military Status ................................................................................................           6A-1
       Extension of SCRA Provisions to Reserves Ordered To Report for Military
       Service and to Persons Ordered To Report for Induction .........................................................                           6A-2
       Protection of Dependents, Co-Borrowers, and Guarantors.......................................................                              6A-2
   Waiver of SCRA Rights ..................................................................................................................       6A-3
   Exercising SCRA Rights Not To Affect Certain Future Transactions ............................................                                  6A-3
   Fines and Penalties on Contracts.....................................................................................................          6A-4
   Maximum Rate of Interest on Loans (The “Six Percent” Rule)......................................................                               6A-4
   Installment Contract Protection After Entering Military Service....................................................                            6A-6
   Business or Trade Obligations.........................................................................................................         6A-6
   Servicemembers Civil Relief Act Notice ........................................................................................                6A-7
   Model Form — SCRA Delinquent Notice ......................................................................................                     6A-7
       United States Department of Housing and Urban Development Servicemembers
       Civil Relief Act Notice .............................................................................................................      6A-7
           Legal Rights and Protections Under the SCRA .................................................................                          6A-7
           Who May Be Entitled to Legal Protections Under the SCRA?..........................................                                     6A-7
           What Legal Protections Are Servicemembers Entitled To Under the SCRA?...................                                               6A-7
           How Does A Servicemember or Dependent Request Relief Under the SCRA? ................                                                  6A-8
           How Does a Servicemember or Dependent Obtain Information About
           the SCRA?..........................................................................................................................    6A-8
Servicemembers Civil Relief Act Checklist 6A.1 ..............................................................................                     6A-9



                                                                         xxvi
                                                                                                                                             Contents


                                     Chapter 6B
              Consumer Credit Extended to Servicemembers and Dependents

DoD Rules on Consumer Loans to Servicemembers ........................................................................ 6B-1
“Covered Borrowers” Subject to Protection ..................................................................................... 6B-1
   Identification of Covered Borrowers............................................................................................... 6B-1
        Covered Borrower Identification Statement ............................................................................. 6B-2
   Verification of Covered Borrower Status........................................................................................ 6B-3
   Conflict Between Covered Borrower Identification Statement and Verification............................ 6B-3
“Consumer Loans” Subject to Limitations ....................................................................................... 6B-4
   Payday Loans .................................................................................................................................. 6B-4
   Vehicle Title Loans ......................................................................................................................... 6B-4
   Tax Refund Anticipation Loans ...................................................................................................... 6B-5
   Exclusions ....................................................................................................................................... 6B-5
Military Annual Percentage Rate (MAPR) Limitations................................................................... 6B-5
   MAPR Calculation .......................................................................................................................... 6B-5
   General MAPR Requirements......................................................................................................... 6B-6
   Maximum MAPR ............................................................................................................................ 6B-6
Mandatory Loan Disclosures .............................................................................................................. 6B-6
   Content of Disclosures .................................................................................................................... 6B-7
   Method of Disclosure — Oral and Written ..................................................................................... 6B-7
        Written Disclosures................................................................................................................... 6B-7
        Oral Disclosures........................................................................................................................ 6B-7
Preemption of State Laws and Other Federal Laws......................................................................... 6B-8
Additional Limitations on Loans to Covered Borrowers ................................................................. 6B-8
Penalties and Remedies ....................................................................................................................... 6B-9
Servicemembers Civil Relief Act Protections Unaffected .............................................................. 6B-10
DoD Rules on Consumer Loans to Servicemembers Checklist 6B.1............................................. 6B-11



                                              Part 4 — Bank Secrecy Act

                                                              Chapter 7
                                                           Bank Secrecy Act

Assessing BSA/AML Risk and Customer Due Diligence.....................................................................                               7-1
   Assessing the Risk of Banking Operations.........................................................................................                 7-1
       Products and Services ..................................................................................................................      7-1
       Customers and Entities ................................................................................................................       7-2
       Geographic Locations ..................................................................................................................       7-2
       Sample BSA/AML Overall Bank Risk Assessment ....................................................................                              7-4
           BSA/AML Overall Bank Risk Assessment...........................................................................                           7-4
   Customer Due Diligence Guidance ....................................................................................................              7-7
       Customer Risk..............................................................................................................................   7-7
       Enhanced Due Diligence for High-Risk Customers ....................................................................                           7-8
   Special Regulator Guidance for Money Service Businesses (MSBs) ................................................                                   7-8
       Basic BSA/Anti-Money Laundering Risk Assessment ...............................................................                               7-9
           Types of Products and Services Offered by the MSB ...........................................................                             7-9


                                                                         xxvii
Risk-Based Compliance Audit Program for Credit Unions


            MSB Service Locations and Markets .................................................................................... 7-9
            Anticipated Account Activity................................................................................................ 7-9
            Purpose of the Account ....................................................................................................... 7-10
       Risk Indicators ........................................................................................................................... 7-10
            Lower Risk Indicators ......................................................................................................... 7-10
            Higher Risk Indicators......................................................................................................... 7-10
       Due Diligence for High-Risk Customers ................................................................................... 7-11
       Identifying and Reporting of Suspicious Activity ..................................................................... 7-11
BSA Risk-Assessment and Customer Due Diligence Checklist 7.0 .................................................. 7-13
Bank Secrecy Act Compliance ............................................................................................................. 7-14
   Compliance Program ........................................................................................................................ 7-14
   Internal Audit ................................................................................................................................... 7-14
   Training ............................................................................................................................................ 7-14
   Anti-Money Laundering Program .................................................................................................... 7-15
   Automatic (Phase I) Exemptions...................................................................................................... 7-16
   Non-Listed Business (Phase II) Exemptions .................................................................................... 7-17
       Ineligible Businesses.................................................................................................................. 7-18
   Payroll Customer Exemptions.......................................................................................................... 7-19
   Currency Transaction Reports.......................................................................................................... 7-19
   Wire Transfer Recordkeeping .......................................................................................................... 7-20
   Purchases/Sales of Monetary Instruments........................................................................................ 7-20
   Suspicious Activity Reports ............................................................................................................. 7-21
BSA Compliance: General Requirements Checklist 7.1 ................................................................... 7-24
BSA Compliance: Exemptions Checklist 7.2 ...................................................................................... 7-28
BSA Compliance: Currency Transaction Reports Checklist 7.3...................................................... 7-31
BSA Compliance: Wire Transfer Recordkeeping Checklist 7.4....................................................... 7-32
BSA Compliance: Sales of Monetary Instruments Checklist 7.5 ..................................................... 7-36
BSA Compliance: Suspicious Activity Reporting Checklist 7.6 ....................................................... 7-38
OFAC Restrictions................................................................................................................................ 7-41
   OFAC Restrictions ........................................................................................................................... 7-41
BSA Compliance: OFAC Restrictions Checklist 7.7 ......................................................................... 7-42
USA PATRIOT Act Provisions............................................................................................................ 7-43
   Records of Foreign Banks Ownership and Agents for Service of Legal Process;
   Prohibition on Correspondent Accounts for Foreign Shell Banks ................................................... 7-43
       Definitions ................................................................................................................................. 7-43
            Institutions Subject to the Restrictions ................................................................................ 7-43
            Definition of “Foreign Bank”.............................................................................................. 7-44
            Definition of “Correspondent Account”.............................................................................. 7-44
       Records of Foreign Correspondent Bank Ownership and Agents for Service of Process ......... 7-44
       Prohibition on United States Correspondent Accounts with Foreign Shell Banks .................... 7-45
       Certification “Safe Harbor” for Foreign Ownership, Legal Process, and
       “Shell Bank” Prohibition ........................................................................................................... 7-46
            Verification of Previously Provided Information................................................................ 7-47
            Special Rules for Certifications Obtained Under the Interim Guidance ............................. 7-47
            Closure of Correspondent Accounts.................................................................................... 7-48
            Accounts Existing on October 28, 2002.............................................................................. 7-48
            Accounts Established After October 28, 2002 .................................................................... 7-48
            Verification of Previously Provided Information................................................................ 7-48
            Re-Establishment of Closed Accounts and Establishment of New Accounts..................... 7-48
       Recordkeeping ........................................................................................................................... 7-49



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                                                                                                                                               Contents


        Summons or Subpoena of Foreign Bank Records; Termination of
        Correspondent Relationship.......................................................................................................               7-49
   Foreign Correspondent Accounts — Final Rule ..............................................................................                           7-49
        General Due Diligence Requirements........................................................................................                      7-50
        Interim Enhanced Due Diligence Requirements........................................................................                             7-50
        Enhanced Due Diligence for Certain Foreign Bank Correspondent Accounts —
        Final Rule...................................................................................................................................   7-51
            Foreign Banks Whose Accounts Are Subject to Enhanced Due Diligence.........................                                                 7-51
            Enhanced Due Diligence Requirements..............................................................................                           7-52
            Special Procedures When Due Diligence or Enhanced Due Diligence Cannot
            Be Performed.......................................................................................................................         7-52
   Private Banking Provisions — Final Rule........................................................................................                      7-53
        General Due Diligence Requirements........................................................................................                      7-53
        Enhanced Due Diligence for Senior Foreign Political Figures..................................................                                   7-54
   Information Sharing with Law Enforcement....................................................................................                         7-54
   Information Sharing Among Financial Institutions..........................................................................                           7-57
   Customer Identification Program Final Requirements .....................................................................                             7-59
        Accounts Subject to CIP Requirements .....................................................................................                      7-59
            Exemptions..........................................................................................................................        7-60
        Customers Subject to CIP Requirements ...................................................................................                       7-60
            Signatories ...........................................................................................................................     7-61
            Exemptions..........................................................................................................................        7-62
        Required Contents for Customer Identification Program ..........................................................                                7-62
        Reliance on Third Parties...........................................................................................................            7-63
        Identity Information Collection and Verification ......................................................................                         7-63
            Required Customer Information To Be Collected...............................................................                                7-64
            Special Rule for Credit Card Accounts ...............................................................................                       7-65
   Customer Identification Verification................................................................................................                 7-65
        Verification Through Documents ..............................................................................................                   7-66
            Accepting Foreign Government Issued Identification Documents Other Than
            Passports as an Acceptable Form of Identification .............................................................                             7-66
        Verification Through Non-Documentary Methods....................................................................                                7-67
        Additional Procedures for Certain Signatories ..........................................................................                        7-67
        Lack of Verification...................................................................................................................         7-68
        Recordkeeping ...........................................................................................................................       7-68
        Comparison with Government Lists ..........................................................................................                     7-69
        Customer Notice ........................................................................................................................        7-69
        Additional Exemptions ..............................................................................................................            7-70
BSA Compliance: USA PATRIOT Act Checklist 7.8 ........................................................................                                  7-71
BSA Compliance: CIP Compliance Review Checklist 7.8a ..............................................................                                     7-81
Certification “Safe Harbor” for Foreign Ownership, Legal Process, and
“Shell Bank” Prohibition Checklist 7.8b ............................................................................................                    7-83
New MSB Customer Review ................................................................................................................                7-88
   Minimum Bank Secrecy Act Due Diligence Expectations .............................................................                                    7-88
   Basic Bank Secrecy Act/Anti-Money Laundering Risk Assessment ...............................................                                         7-89
        Types of Products and Services Offered by the MSB ...............................................................                               7-89
        Location(s) and Market(s) Served by the MSB .........................................................................                           7-89
        Anticipated Account Activity ....................................................................................................               7-90
        Purpose of the Account..............................................................................................................            7-90
        Risk Indicators ...........................................................................................................................     7-90
        Due Diligence for Higher Risk Customers ................................................................................                        7-91


                                                                           xxix
Risk-Based Compliance Audit Program for Credit Unions


   Identification and Reporting of Suspicious Activity ........................................................................                        7-92
Review of New MSB Customer Checklist 7.9.....................................................................................                          7-94
Appendices on CD.................................................................................................................................      7-96
   Appendix 7.A: Interim Shell Bank/Ownership Certification ...........................................................                                7-96
   Appendix 7.B: Foreign Bank Certification Form.............................................................................                          7-96
   Appendix 7.C: Final Information Sharing Certification Form .........................................................                                7-96
   Appendix 7.D: Foreign Bank Recertification Form .........................................................................                           7-96
   Appendix 7.E: Customer Risk vs. Due Diligence and Suspicious Activity Monitoring ..................                                                 7-96



                                               Part 5 — Record Retention

                                                        Chapter 8
                                               Record Retention and Disposal

Record Retention ....................................................................................................................................      8-1
   Regulation B.......................................................................................................................................     8-1
   National Banks Only ..........................................................................................................................          8-2
   Electronic Fund Transfer Act Record Retention, Regulation E .........................................................                                   8-2
   Regulation Z .......................................................................................................................................    8-2
   Truth-in-Savings.................................................................................................................................       8-3
   Flood Insurance ..................................................................................................................................      8-3
   RESPA, Regulation X ........................................................................................................................            8-3
   Fair Credit Reporting Act...................................................................................................................            8-3
Checklist for Record Retention 8.1 .......................................................................................................                 8-5



                                                           Part 6 — Privacy
                                                          Chapter 9
                                                Right to Financial Privacy Act
Right to Financial Privacy Act...............................................................................................................              9-1
   General Requirements for Access ......................................................................................................                  9-1
        Methods Allowing Access to Customer Financial Access ..........................................................                                    9-1
            Customer Authorizations (12 USC 3404) .............................................................................                            9-2
            Administrative Subpoena and Summons (12 USC 3405) .....................................................                                        9-2
            Search Warrants (12 USC 3406) ...........................................................................................                      9-3
            Judicial Subpoena (12 USC 3407) ........................................................................................                       9-4
            Formal Written Request (12 USC 3408) ...............................................................................                           9-5
        Certification by Government Authority.......................................................................................                       9-6
   Record Retention................................................................................................................................        9-6
   Cost Reimbursements.........................................................................................................................            9-6
   Customer Challenges (12 USC 3410) ................................................................................................                      9-7
   Exceptions ..........................................................................................................................................   9-8
        Right to Financial Privacy Act.....................................................................................................                9-8
            Exceptions to Both the Notice and Certification Requirements............................................                                       9-8


                                                                            xxx
                                                                                                                                                 Contents


            Exceptions to Notice Requirements — Certification Is Required......................................... 9-9
            Delayed Notice Requirements............................................................................................. 9-11
        Bank Secrecy Act....................................................................................................................... 9-12
   Civil Liability ................................................................................................................................... 9-13
Right to Financial Privacy Act Checklist 9.1...................................................................................... 9-14


                                                                   Chapter 10
                                                                  Privacy Rule

Privacy Rule .......................................................................................................................................... 10-1
    Coverage........................................................................................................................................... 10-1
       Timing of Initial Disclosure....................................................................................................... 10-2
       Timing of Annual Disclosure..................................................................................................... 10-3
       Contents of Standard Disclosure................................................................................................ 10-3
            A Note Regarding “Opt-Outs” ............................................................................................ 10-4
       Contents of Simplified Disclosure ............................................................................................. 10-5
       Short-Form Disclosure for Consumers That Are Not Members................................................ 10-5
       “Clear and Conspicuous”........................................................................................................... 10-5
       Changing the Terms of the Privacy Policy ................................................................................ 10-6
            Form and Content of Opt-Out Notice to Consumers........................................................... 10-7
            Compliance with “Opt-Out” Election ................................................................................. 10-8
            Continuing Right to Opt Out ............................................................................................... 10-8
            Duration of Consumer’s Opt-Out Election.......................................................................... 10-8
       Disclosure of Information to Nonaffiliated Third Parties .......................................................... 10-9
    Exceptions to “Opt Out”................................................................................................................... 10-9
       Exception for Service Providers and Joint Marketing ............................................................... 10-9
       Exceptions for Processing and Servicing Transactions ........................................................... 10-10
       “Other” Exceptions to Notice and Opt-Out Requirements ...................................................... 10-11
Privacy Rule Checklist 10.1................................................................................................................ 10-14
    Exhibits on CD ............................................................................................................................... 10-18
       Exhibit 10.1: Interagency Guidance on Financial Privacy: Frequently Asked
       Questions for the Privacy Regulation ...................................................................................... 10-18
       Exhibit 10.2: Sample Privacy Disclosures............................................................................... 10-18
       Exhibit 10.3: Interpretive Letter 910........................................................................................ 10-18


                                                        Chapter 11
                                            Security of Customer Information

Security of Customer Information ......................................................................................................                   11-1
   Definitions ........................................................................................................................................   11-1
   Standards for Safeguarding Customer Information..........................................................................                              11-1
       Information Security Program ...................................................................................................                   11-1
       Objectives ..................................................................................................................................      11-1
   Development and Implementation of Information Security Program ..............................................                                          11-2
       Involve the Board of Directors ..................................................................................................                  11-2
       Assess Risk ................................................................................................................................       11-2
       Manage and Control Risk ..........................................................................................................                 11-2
       Oversee Service Provider Arrangements ...................................................................................                          11-3


                                                                            xxxi
Risk-Based Compliance Audit Program for Credit Unions


       Adjust the Program .................................................................................................................... 11-3
       Report to the Board.................................................................................................................... 11-3
Security of Customer Information Checklist 11.1 ............................................................................. 11-4


                                                              Chapter 11A
                                                               FACT Act

ID Theft “Red Flags”......................................................................................................................... 11A-1
    Identity Theft Red Flags................................................................................................................ 11A-1
        Required Elements of the Identity Theft Program .................................................................. 11A-1
        Administration of the Program ............................................................................................... 11A-2
ID Theft “Red Flags” Checklist 11A.1 ............................................................................................. 11A-3
Duties of Card Issuers Regarding Changes of Address.................................................................. 11A-4
    “Cardholders” Protected by the Rule ............................................................................................ 11A-4
    Address Validation Requirements ................................................................................................. 11A-5
Duties of Card Issuers Regarding Changes of Address Checklist 11A.2...................................... 11A-6
Duties of Users of Consumer Reports Regarding Address Discrepancies .................................... 11A-7
    Notice of Address Discrepancy ..................................................................................................... 11A-7
    Response to Notice of Address Discrepancy................................................................................. 11A-8
    Requirement To Furnish Consumer’s Address to a Consumer Reporting Agency....................... 11A-8
Users of Consumer Reports Regarding Address Discrepancies Checklist 11A.3 ...................... 11A-10
Affiliate Marketing Opt-Out Under FCRA................................................................................... 11A-11
    Affiliate Marketing Opt-Out and Exceptions .............................................................................. 11A-12
        Solicitations Subject to the Rule ........................................................................................... 11A-13
             Definition of “Solicitation” ............................................................................................ 11A-13
             Receiving Eligibility Information from an Affiliate, Including Through
             a Common Database....................................................................................................... 11A-13
             Receipt or Use of Eligibility Information by Your Service Provider............................. 11A-14
             Use by an Affiliate of Its Own Eligibility Information .................................................. 11A-14
        Exceptions............................................................................................................................. 11A-15
             Definition of “Pre-Existing Business Relationship” ...................................................... 11A-15
    Affiliates Who May Provide the Notice ...................................................................................... 11A-16
    Scope and Duration of Opt-Out................................................................................................... 11A-16
        Providing Menu of Alternatives for Opt-Out........................................................................ 11A-16
        Special Rule for a Notice Following Termination of All Continuing Relationships ............ 11A-16
        Duration of Opt-Out.............................................................................................................. 11A-17
        Time of Opt-Out ................................................................................................................... 11A-17
    Contents of Opt-Out Notice......................................................................................................... 11A-17
        Opt-Outs Involving Joint Relationships................................................................................ 11A-18
        Alternative Contents in Cases of Broader Opt-Out Rights ................................................... 11A-18
        Model Notices....................................................................................................................... 11A-18
        Coordinated and Consolidated Notices................................................................................. 11A-18
        Equivalent Notices ................................................................................................................ 11A-19
        Methods of Providing the Opt-Out Notice............................................................................ 11A-19
    Methods of Opting Out................................................................................................................ 11A-20
    Delivery of Opt-Out Notices ....................................................................................................... 11A-20
    Expiration and Renewal of Opt-Out............................................................................................ 11A-21
        Contents of Renewal Notice ................................................................................................. 11A-21
        Timing of the Renewal Notice .............................................................................................. 11A-22



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                                                                                                                                                 Contents


Affiliate Marketing Opt-Out Under FCRA Checklist 11A.4 ....................................................... 11A-23
        Exhibit 11A.1: Section 615(a) of the FCRA and Section 202.9(f) of Regulation B,
        Implementing the Equal Credit Opportunity Act.................................................................. 11A-24
        Exhibit 11A.2: Appendix J to Part 334 ................................................................................. 11A-26



                                          Part 7 — Electronic Disclosures

                                                              Chapter 12
                                                         Electronic Disclosure
Electronic Disclosure ............................................................................................................................        12-1
    Exceptions ........................................................................................................................................   12-1
    E-Sign Act Compliance....................................................................................................................             12-2
    Consent to Receive Electronic Disclosures ......................................................................................                      12-2
       Contents of Consent Disclosure.................................................................................................                    12-2
           Additional Requirements for Disclosures Provided Under Regulations B, E, Z,
           and DD ................................................................................................................................        12-3
    Change in Hardware/Software Requirements ..................................................................................                           12-7
    Exceptions to Preemption.................................................................................................................             12-7
Electronic Disclosure Checklist 12.1 ...................................................................................................                  12-9




                                           Part 8 — Web Site Compliance

                                                             Chapter 13
                                                         Web Site Compliance
Web Site Compliance............................................................................................................................ 13-1
   NCUA — Official Advertising Statement ....................................................................................... 13-1
General Web Site Disclosure Requirements Checklist 13.1.............................................................. 13-3
Deposit Account Advertising Checklist 13.2....................................................................................... 13-5
Closed-End Loan Advertisements Checklist 13.3 .............................................................................. 13-8
Open-End Loan Advertisements Checklist 13.4 .............................................................................. 13-10
Loan Applications Checklist 13.5 ...................................................................................................... 13-12
Appendix 13.A: Advertisements That Do Not Require the Official
Advertising Statement ........................................................................................................................ 13-14
Appendix 13.B: Timing and Method of Disclosures ........................................................................ 13-16
Appendix 13.C: E-Sign Act Requirements ....................................................................................... 13-17
Appendix 13.D: Examples of Advertisements That Mislead, Misrepresent, or
Are Inaccurate..................................................................................................................................... 13-20




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Risk-Based Compliance Audit Program for Credit Unions


                 Part 9 — Lending Compliance Laws and Regulations

                                      Chapter 14
             Coverage of Selected Lending Compliance Laws and Regulations

Introduction to Coverage and Applicability of the Laws and Regulations ..................................... 14-1
Equal Credit Opportunity Act (ECOA).............................................................................................. 14-1
    Coverage........................................................................................................................................... 14-1
    General Requirements ...................................................................................................................... 14-2
Fair Credit Reporting Act (FCRA) ..................................................................................................... 14-2
    Coverage........................................................................................................................................... 14-2
    Exceptions ........................................................................................................................................ 14-3
        Transactions and Direct Experience .......................................................................................... 14-3
        Communications with Affiliate.................................................................................................. 14-4
        Joint Users.................................................................................................................................. 14-4
    General Requirements ...................................................................................................................... 14-5
    Disclosure of Credit Score in Real Estate Secured Loans................................................................ 14-5
        Specific Information Related to the Consumer’s Credit Score.................................................. 14-6
        General Disclosure Regarding Credit Scores and Related Information..................................... 14-7
    Fraud Alerts and Active Duty Alerts................................................................................................ 14-7
    Obtaining or Using Medical Information in Connection with a Determination of
    Eligibility for Credit ......................................................................................................................... 14-8
        Medical Information Subject to the Rule................................................................................... 14-9
        The Rule in General ................................................................................................................. 14-10
             Financial Information Exception for Obtaining and Using Medical Information ............. 14-10
             Specific Exceptions for Obtaining and Using Medical Information ................................. 14-13
        Limits on Redisclosure of Information .................................................................................... 14-16
        Sharing Medical Information with Affiliates........................................................................... 14-16
Truth-in-Lending Act (TILA)............................................................................................................ 14-17
    Coverage......................................................................................................................................... 14-17
    Open-End and Closed-End Credit .................................................................................................. 14-19
    Definition of “Credit Card” ............................................................................................................ 14-19
    Relation to Regulation E ................................................................................................................ 14-20
Real Estate Settlement Procedures Act (RESPA) ............................................................................ 14-20
    Coverage......................................................................................................................................... 14-21
    General Requirements .................................................................................................................... 14-23
Flood Disaster Protection Act (FDPA).............................................................................................. 14-23
    Coverage......................................................................................................................................... 14-24
    General Requirements .................................................................................................................... 14-24
    Insurance Coverage Limits............................................................................................................. 14-25
Fair Housing Act (FHA) ..................................................................................................................... 14-25
Home Mortgage Disclosure Act (HMDA)......................................................................................... 14-25
    Coverage......................................................................................................................................... 14-26
    General Requirements .................................................................................................................... 14-26
Electronic Fund Transfer Act (EFTA).............................................................................................. 14-27
    Coverage......................................................................................................................................... 14-27
    Checks Converted to ACH Payments............................................................................................. 14-29
    Applicability of EFT Rules vs. Truth-in-Lending Rules ................................................................ 14-30
    General Requirements .................................................................................................................... 14-31


                                                                         xxxiv
                                                                                                                                              Contents


    Relation to the Truth-in-Lending Act.............................................................................................                14-31
Insurance Sales Rules .........................................................................................................................      14-33
    Persons Subject to the Rules...........................................................................................................          14-33
    Insurance Covered by the Rules .....................................................................................................             14-34
        Renewals..................................................................................................................................   14-34
    Restrictions Imposed by Insurance Sales Rules .............................................................................                      14-34
Homeowners Protection Act of 1998 .................................................................................................                  14-35
        Exhibit 14.1: “Joint Users” — FCRA Sections 603(f) and 604(a)(3)(A) ................................                                         14-36




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